📚 Learning Guide
Consumer Utility Maximization
hard

If a consumer is maximizing utility, they will always choose to buy the good with the highest total utility rather than considering the price they pay for it.

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

True

B

False

Understanding the Answer

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Answer

When a consumer is trying to maximize their utility, they want to get the most satisfaction or happiness from the goods they buy. However, it's not just about choosing the good that gives the highest total utility; they also need to think about the price of each good. For example, if a consumer loves ice cream and it gives them a total utility of 10 but costs $5, while a book gives them a total utility of 8 and costs $2, it makes sense to buy the book. This is because the book provides more utility per dollar spent. So, consumers look for the best balance between the satisfaction they receive and the money they spend to maximize their overall happiness.

Detailed Explanation

Consumers think about both the satisfaction they get and the price they pay. Other options are incorrect because This answer suggests that price doesn't matter at all.

Key Concepts

Consumer Utility Maximization
Marginal Utility
Price Elasticity
Topic

Consumer Utility Maximization

Difficulty

hard level question

Cognitive Level

understand

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